As a result of worries that sharp hikes in US interest rates may trigger a worldwide economic slowdown and reduce demand for fuel, oil prices plummeted 4% today, Monday, ending three sessions of gains.
By 14:15 GMT, the price of Brent crude contracts for delivery in October had dropped 4. 1% to $ 92. 50 per barrel.
Additionally, the price of September delivery of US benchmark West Texas Intermediate crude, whose trading session ends at the close of today, dropped to $86.60 per barrel.
Later, the two benchmarks slightly reduced their losses, with US crude trading at $87. 25 per barrel and Brent trading at $93.
Following this performance, the session mostly saw stability as a result of the conflicting effects of the global supply shortage, recessionary fears, and the rise in the value of the dollar.
Ole Hansen, head of commodities at Saxo Bank, claimed that rising natural gas prices, exacerbated by dwindling Russian supply, are raising oil demand.
Early in March, the price of Brent crude reached above $140 per barrel; however, it has subsequently fallen while inflation has skyrocketed to multi-decade highs.
According to Hansen, refinery earnings were once again on the rise, in part because of higher gas prices, while institutions continued to sell crude oil in anticipation of an economic slump. This gives refined substitutes like diesel a cheap appearance.
Global supplies are still somewhat limited, and a pipeline operator who moves 1% of the world’s oil through Russia has announced that it will again cut back on production because of malfunctioning machinery.
A rise in the US dollar often has a negative effect on the market because the majority of the world’s oil trading is done in dollars. In the meantime, the dollar index shot up to its highest level in five weeks on Monday.
On concerns about a rate increase, oil drops 4%, and Brent is at $92.5.
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